Update: Updated at 1:21 p.m. July 14 to include statement from the USDA's Food and Nutrition Service.

Several North Texas farmers markets are scrambling to figure out how to accept benefits formerly known as food stamps after learning that the Austin-based company they use to process these transactions plans to shut down July 31.

Two local nonprofit groups, Good Local Markets and Grow North Texas, have been using software developed by Novo Dia to process payments made through the Supplemental Nutrition Assistance Program, or SNAP, at their markets.

Grow North Texas operates the SNAP token system at the Dallas Farmers Market as well as two auxiliary markets, and Good Local operates markets at White Rock and at Paul Quinn College.

But Novo Dia, which serves about 1,700 farmers markets nationwide, recently lost its role in the U.S. Department of Agriculture's SNAP equipment program after the agency awarded a contract to a different management company,The Washington Postreported earlier this week.

Novo Dia was a provider for the Farmers Market Coalition, a nonprofit that was previously contracted to manage the USDA’s free wireless SNAP equipment program through November 2017. After a competitive bidding process, Financial Transaction Management, a new contractor based in Reston, Va., was selected in April to take over the program.

Josh Wiles, president of Novo Dia, said his company now plans to shut down. “It wasn’t just one thing,” he said, “but this was the last thing.”

Brandon Lipps, administrator for the USDA's Food and Nutrition Service, issued the following statement on July 14: "The Food and Nutrition Service (FNS) was recently informed by a major provider of mobile EBT technology for farmers markets and farm stands that it will discontinue this service. With few providers in this marketplace, this is of great concern. ... USDA has been exploring all available options in an attempt to avoid a service disruption." Read the full statement here.

Financial Transaction Management did immediately responded to requests for comment.

Susie Marshall is executive director of Grow North Texas, which manages the SNAP token system at the Dallas Farmers Market.

(Vernon Bryant/Staff Photographer)

'A big surprise'

In Texas, SNAP recipients can use debit-like Lone Star Cards at grocery stores to buy goods, but farmers markets are required to use a special mobile payment system to process the cards securely.

Now, without Novo Dia's card processing system, markets are trying to figure out what their options are.

"This is a big surprise to us, since it's really important for us to have SNAP at the market," said Casey Cutler of Good Local Markets. "It's a big blow to food access."

Last year, Good Local Markets did about $3,500 in SNAP sales. It has done about $2,000 this year. Susie Marshall, executive director of Grow North Texas, says it does about $200 to $300 a week in SNAP sales among all three markets.

Ben Feldman, policy director at the Farmers Market Coalition, said the timing of this situation is a problem, because summer is the peak season for many farmers and markets.

"I'm concerned about the impact to [the markets]. And it's the farmers who rely on this and the SNAP consumers who pay the price here," he said. "From my perspective, this is terrible."

What comes next?

At this point, markets don’t know whether they’ll be able to continue working with SNAP customers after July 31.

The USDA’s new provider, FTM, is required to begin processing applications for wireless equipment from new markets and farmers this month, according to the statement from Lipps of FNS. FTM was formed in late 2017 and awarded a $1.3 million federal government contract in April.

Wiles of Novo Dia said he is working on measures to prevent service interruptions for markets.

“It’s a big ask for some government agencies to act in a fast period of time,” he said. “It’s a totally new organization and takeover.”

Amanda Austin, market manager at the Coppell Farmers Market, said it uses Merchant Source, so it will not be affected and will continue accepting SNAP.

Kim Lyons, president of Merchant Source, said via email that her company is “actively offering alternative solutions” to markets, such as rental equipment or purchased equipment, but is waiting for further clarity on the situation.

Signs along Garland Road point the way to the White Rock Lake Farmers Market.

(Ron Baselice/Staff Photographer)

Out-of-pocket cost high

But the problem is cost. Feldman said the only solution for markets right now might be to pay out of pocket for a new system, which can cost about $1,000. Many markets cannot afford to pay for the equipment without financial assistance. For now, markets are in a bind. And so are SNAP recipients and farmers.

“It is definitely extremely expensive and a major haul for us to switch services,” Good Local’s Cutler said via email. “We would have to have a fundraiser specifically for this equipment, which we would do because food access and having SNAP as a program at our market is important.”

“This hurts the SNAP recipients that are trying their best to use their SNAP dollars in good ways, to buy fresh foods,” Marshall said. “It also hurts farmers who can’t receive that income that they would otherwise be getting.”

Feldman of the Farmers Market Coalition says that the community has made a lot of progress in getting people access to fresh food. "And this kind of change," he said, "has the potential to undermine a lot of good work."